Government investment in PSE pays off, CCPA study says

June 14, 2013

Public investment in PSE is paid back to government in full, and helps reduce the financial burden to students, says a new study by the Canadian Centre for Policy Alternatives (CCPA). The study backs up the often-touted fact that public funding for PSE is paid back many times over when graduates pay higher income tax on their higher earnings. According to the 2006 Census, 25-34 year-olds with a BA/BSc working full-time made $50,857 compared to $37,475 for high school grads. “The length of time it takes governments to recoup their investment in PSE in the form of income taxes ranges from a low of 10.3 years in Ontario to 17.5 years in Saskatchewan,” says the study’s author. “While completely eliminating tuition would increase the payback period, those increases are minimal -- ranging from 0.6 years in Quebec to 2.6 years in PEI and BC.” The study also debunks the claim that subsidized tuition leads to an unfair, regressive income transfer from lower-income families to middle- and upper-income families. It argues that “when the source of revenue required to fund PSE is taken into account, subsidies for PSE redistribute resources away from higher-income households and towards lower-income households, not the other way around.” CCPA News Release